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helping others help themselves
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Puptart
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I have. I've microfinanced more than one person through Kiva.
Anyone who wants to know more about Kiva and what they do (microfinancing) can check it out here: Kiva - About Us
Anyone who wants to know more about Kiva and what they do (microfinancing) can check it out here: Kiva - About Us
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I noticed the "middleman" with them charges very high interest rates to the entrepreneurs. Does that concern you at all?
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Puptart
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Not really, no. There will always be a cost of business and that's how the financial backers make their money. Nothing in life is free. When I left my ex-husband I lived on credit 'til I could find a job.. think the credit card company cared that I was destitute? Heck no. Still paying it off years later at high interest rates. That's just life.
If we wanted to we could all just send our money out into the void directly to people who "needed it" and you know what would happen? We'd get had. Taken for all we're worth and we'd never see that money again because people would take advantage.. systems like this, while they may appear "unfair" on the surface, are in place to ensure people are doing it because they NEED it and to take on the financial risk for us instead of us having to do it ourselves.
By all means if you wanna skip the middle-man, head out to your local homeless shelter and just hand out money.
I'll stick with Kiva, though.
Kiva isn't a charity system in the traditional sense of the word. Kiva is helping people help themselves, which in my opinion is better than charity. Kiva's purpose isn't to give money to people, it's to allow someone the chance to obtain a loan where they wouldn't normally perhaps qualify or be able to get one. These loans, because people might not otherwise qualify, are high risk loans and high risk comes with high interest/high payback. This is the same reason credit card companies charge in around 20% interest (and store cards sometimes up around 30%) -- because anyone can typically get a credit card or a store card, within reason. It's high-risk, therefor high-interest. If you show good behavior, most cards will allow you to switch to lower interest rates.
This is just the way the world works I'm afraid. You have to be realistic.
If we wanted to we could all just send our money out into the void directly to people who "needed it" and you know what would happen? We'd get had. Taken for all we're worth and we'd never see that money again because people would take advantage.. systems like this, while they may appear "unfair" on the surface, are in place to ensure people are doing it because they NEED it and to take on the financial risk for us instead of us having to do it ourselves.
By all means if you wanna skip the middle-man, head out to your local homeless shelter and just hand out money.
I'll stick with Kiva, though.
Kiva isn't a charity system in the traditional sense of the word. Kiva is helping people help themselves, which in my opinion is better than charity. Kiva's purpose isn't to give money to people, it's to allow someone the chance to obtain a loan where they wouldn't normally perhaps qualify or be able to get one. These loans, because people might not otherwise qualify, are high risk loans and high risk comes with high interest/high payback. This is the same reason credit card companies charge in around 20% interest (and store cards sometimes up around 30%) -- because anyone can typically get a credit card or a store card, within reason. It's high-risk, therefor high-interest. If you show good behavior, most cards will allow you to switch to lower interest rates.
This is just the way the world works I'm afraid. You have to be realistic.
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Good points there.
Another concern I have, though, is the very low percentage of these loans that apparently default. I wouldn't expect this to be the case.
A high percentage of businesses fail in the first year starting out in north america. It seems odd that in the developing world the odds of success would be far greater.
Any ideas why this would be?
Another concern I have, though, is the very low percentage of these loans that apparently default. I wouldn't expect this to be the case.
A high percentage of businesses fail in the first year starting out in north america. It seems odd that in the developing world the odds of success would be far greater.
Any ideas why this would be?
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Andres88
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I was a Small and Medium Enterprise Credit Analyst in a bank here in Dominican Republic. True: Rates destined for those sectors tend to have higher interest rates, but that's precisely because of the risk levels. Higher risk demand higher profit; else the operation would not be as sound.
Regarding your question on businesses with less failure rate in the developing world during their first year, it's true. We may experience that in developing countries maybe because of how we deal with being in need. It puts a higher pressure on needing to do something to cover our needs, and that's why there are so many entrepreneurs here. Another note is that we tend to create very small businesses, mainly to cover our needs and a little more, but that greed and obsession with ambitious projects are not the norm.
Our ability to adapt to situations also help in that sense. The fact that developed countries can at least count with certain job guarantees, welfare, and the like, may prevent some from seeing the need of running a new business and making it work and last.
Regarding your question on businesses with less failure rate in the developing world during their first year, it's true. We may experience that in developing countries maybe because of how we deal with being in need. It puts a higher pressure on needing to do something to cover our needs, and that's why there are so many entrepreneurs here. Another note is that we tend to create very small businesses, mainly to cover our needs and a little more, but that greed and obsession with ambitious projects are not the norm.
Our ability to adapt to situations also help in that sense. The fact that developed countries can at least count with certain job guarantees, welfare, and the like, may prevent some from seeing the need of running a new business and making it work and last.
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